DEAL OF THE DAY: Donaldson Group and Equity Partner Buy Value-Add Opportunity from Tarragon

Temple Hills, Md.--The Donaldson Group and Angelo, Gordon & Co. acquired a 459-unit apartment community in Temple Hills, Md. for $38 million in an all-cash transaction.

Temple Hills, Md.–The Donaldson Group (TDG) of Rockville, Md. and its equity partner, New York-based Angelo, Gordon & Co. (AG), acquired a 459-unit apartment community in Temple Hills, Md. for $38 million in an all-cash transaction.

The seller, Tarragon Corp. of New York City, sold the property as part of a reorganization following Chapter 11 bankruptcy last year. Marcus & Millichap’s Stacey Milam and Victor Nolletti represented the seller in the transaction. TDG’s partner AG is a SEC-registered investment adviser.

The new ownership will embark shortly on a capital improvement program for the Heather Hill Apartment Homes, located at 5837 Fisher Road in Prince George’s County. Common area renovations will include extensive improvements to the property’s community center, including a new fitness center, business center, entrance, lobby, and landscaping.

Interior unit renovations will provide residents with all-new kitchens, updated bathrooms with water-conserving fixtures, new carpeting, individual washer-dryers, new windows and sliding doors, new balcony railings, and upgrades to the mechanical, electrical, and plumbing systems. Building exterior improvements will include new facades, gutters, and downspouts.

“This is what The Donaldson Group does,” says TDG Executive Vice President Carlton Einsel. “We specialize in finding value-add opportunities and repositioning properties through intelligent, well-designed and cost-effective renovations and hands-on property management.”

“Heather Hill is just the type of property that we like,” he says. “Built in 1965 with just minor renovations in the 1980s, Heather Hill has been starved for capital and has suffered from above-market vacancy and below-market rental rates, and affords us the upside potential we look for in our deals.”

Einsel noted that although there was significant interest in the property, the joint venture’s ability to make an all-cash offer in conjunction with its accelerated due diligence and settlement period helped meet the seller’s objective of closing before the end of the year. TDG is working with CBRE Capital Markets to obtain financing that it expects to put in place shortly after closing on the acquisition.

Heather Hill comprises 18 low-rise buildings situated on 21 park-like wooded acres. Residents enjoy their own neighborhood playground, swimming pools, tennis court, basketball court, and an onsite Metrobus stop. The community has easy access to I-495 and is located just a short distance from shopping, entertainment, and major employment centers including National Harbor, Andrews and Bolling Air Force Bases, the Washington Navy Yard, the Census Bureau, and many more.

Heather Hill’s apartment homes comprise a mix of one-, two-, and three-bedroom units ranging from 610 to 1,236 square feet, each one featuring a private balcony or patio. Heather Hill is the only property in the area that offers three-bedroom, two-bath apartments, and it is also the only one in which all two-bedroom units have two bathrooms. All of the second-story apartments feature dual wood-burning fireplaces and oversized walk-in closets.

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